First Interstate Bank of California v Cohen Arnold & Company
| Jurisdiction | England & Wales |
| Judge | Nourse,Ward L JJ,Sedley J. |
| Judgment Date | 28 November 1995 |
| Date | 28 November 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Nourse, Lord Justice Ward and Mr Justice Sedley
Negligence - loss of substantial chance - quantum of damages
In an action for negligence, a plaintiff who was able to prove that the defendant's action had caused him the loss of a chance that was substantial and not merely speculative, was entitled to damages for that loss. The evaluation of that chance was a matter to be taken into account in quantifying the amount of the damages to be awarded.
The Court of Appeal so held in a reserved judgment allowing an appeal by the defendants, Cohen Arnold & Co, chartered accountants, by reducing the amount of the £1.9 million damages that Mr Justice Jacob had in March 1994 ordered them to pay to the plaintiff, First Interstate Bank of California, for the loss of the chance to sell development property in a falling market.
Mr William Crowther, QC and Mr Christopher Gibson for the defendants; Mr Steven Gee, QC and Mr Joseph Smouha for the bank.
LORD JUSTICE NOURSE said that the questions were whether the bank in an action for negligent misstatement was entitled to damages for the loss of a chance and, if so, of what amount.
The bank financed a property transaction in Southwark entered into by Mr Milton Gross, a client of the defendants.
In June 1990 the loan stood at £4.8 million and, owing to market conditions, the bank became anxious and made inquiries to the defendants as to Mr Gross's net worth.
In a letter dated June 22, Mr Michael Barnett, the partner responsible, replied that Mr Gross was considered to be worth in excess of £45 million. The defendants admitted by August 17 that Mr Gross had assets worth no more the £57,000 and that they had been in breach of their duty of care to the bank when writing the letter.
In September the bank started marketing the property, it being eventually sold in lots for a total of £1.4 million.
The judge had found that the bank had relied on the letter until at least August 17 and the probability was that had it known the true position in June it would have enforced its security by marketing the property then and obtaining on the sale an estimated price of £3 million.
The judge recorded the opposing submission made by the defendants that had the true position been known what would have happened to the property was much the same as what did happen.
The judge went on to say that a balance between...
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